Adobe's Revenue Trails Estimates, Hurt by 'Cloud' Model

Revenue will be recognized over a longer period, the company says.

NEW YORK ( TheStreet) -- Adobe ( ADBE) trailed Wall Street's revenue estimates in its third quarter as the company ramps up its subscription business.

The San Jose, Calif.-based firm reported revenue of $1.081 billion, below analysts' expectations of $1.10 billion and at the low end of its own guidance of $1.075 billion to $1.125 billion. Adobe took a $9 million hit from currency losses.

Excluding items, Adobe earned 58 cents a share, in line with the forecast from analysts surveyed by Thomson Reuters.

Adobe, however, said that as customers migrate from its older Creative Suite perpetual licensing model to new Creative Cloud subscriptions, revenue is recognized over a longer period of time.

"We're on a path to drive millions of subscribers to our Creative Cloud offering, as well as build a billion dollar SaaS software as a service business in Digital Marketing," said Mark Garrett, Adobe CFO's, in a statement. "This will drive higher long-term growth and create a large recurring revenue stream."